Correlation Between Risesun Real and Bohai Leasing

Can any of the company-specific risk be diversified away by investing in both Risesun Real and Bohai Leasing at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Risesun Real and Bohai Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Risesun Real Estate and Bohai Leasing Co, you can compare the effects of market volatilities on Risesun Real and Bohai Leasing and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Risesun Real with a short position of Bohai Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Risesun Real and Bohai Leasing.

Diversification Opportunities for Risesun Real and Bohai Leasing

0.91

Correlation Coefficient

Risesun Real  Bohai Leasing

Almost no diversification

The 3 months correlation between Risesun and Bohai is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Risesun Real Estate and Bohai Leasing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohai Leasing and Risesun Real is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Risesun Real Estate are associated (or correlated) with Bohai Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohai Leasing has no effect on the direction of Risesun Real i.e., Risesun Real and Bohai Leasing go up and down completely randomly.

Pair Corralation between Risesun Real and Bohai Leasing

Assuming the 90 days trading horizon Risesun Real is expected to generate 2.11 times less return on investment than Bohai Leasing. In addition to that, Risesun Real is 1.42 times more volatile than Bohai Leasing Co. It trades about 0.02 of its total potential returns per unit of risk. Bohai Leasing Co is currently generating about 0.07 per unit of volatility. If you would invest  215.00  in Bohai Leasing Co on September 30, 2024 and sell it today you would earn a total of  179.00  from holding Bohai Leasing Co or generate 83.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Risesun Real Estate  vs.  Bohai Leasing Co

Risesun Real Estate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Risesun Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Risesun Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bohai Leasing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bohai Leasing Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bohai Leasing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Risesun Real and Bohai Leasing

The main advantage of trading using opposite Risesun Real and Bohai Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Risesun Real position performs unexpectedly, Bohai Leasing can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bohai Leasing will offset losses from the drop in Bohai Leasing's long position.

The idea behind Risesun Real Estate and Bohai Leasing Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.